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Esposito, Michele Docket No. 421

Docket No. 421In the Matter of Michele Esposito

Date: September 6, 1991

DISPOSITION AGREEMENT

This Disposition Agreement (Agreement) is entered into between the State Ethics Commission (Commission) and Michele Esposito (Ms. Esposito) pursuant to section 5 of the Commission’s Enforcement Procedures. This agreement constitutes a consented to final Commission order enforceable in the Superior Court pursuant to G.L. c. 268B, §4(j).

On January 16, 1991, the Commission initiated, pursuant to G.L. c. 268B, §4(a), a preliminary inquiry into possible violations of the conflict of interest law, G.L. c. 268A, by Ms. Esposito. The Commission has concluded that inquiry and, on April 18, 1991, found reasonable cause to believe that Ms. Esposito violated G.L. c. 268A, §6.

The Commission and Ms. Esposito now agree to the following findings of fact and conclusions of law:

1. At all relevant times, Ms. Esposito was a Massachusetts Department of Revenue (DOR), Child Support Enforcement Unit (CSEU) employee.

2. On September 20, 1989, the DOR entered into a 4.8 million dollar contract (Contract) with Maximus Inc. (Maximus), a Virginia-based technical consulting company with a local office in Waltham.

3. The Contract required Maximus to review and replicate the relevant portions of 70,000 probate and district court files so as to create an information base for enforcement purposes for the CSEU.

4. On or about September 20, 1989, Ms. Esposito was assigned to be the co-contract administrator of the Contract.[1] Thus, her responsibilities included day-to­day supervision of contract performance as well as ensuring that Maximus satisfied all the required steps specified by the Contract (each step being referred to as a “deliverable”).

5. In October, 1989, Ms. Esposito decided to leave the DOR. She began looking for employment elsewhere.

6. At that time, Ms. Esposito informed her immediate supervisor, Paul Osganian (Osganian) that she would be seeking employment elsewhere.

7. On October 12, 1989, Ms. Esposito discussed her intention to leave the DOR with Maximus’ president, Raymond Ruddy. At that time, Ruddy tried to persuade her to stay at the DOR.

8. On November 3, 1989, Ms. Esposito and her court counterpart reviewed Maximus’ project plan submitted pursuant to the Contract. They suggested a number of modifications to the plan.

9. On November 27, 1989, Ms. Esposito approved Maximus’ first “deliverable,” which was the completion of a satisfactory project plan. By approving the deliverable, Ms. Esposito was recommending that her superiors approve the payment to Maximus of that portion of the Contract attributable to the first deliverable, namely $287,816.40.

10. On December 1, 1989, at Mr. Ruddy’s request, Ms. Esposito met with Ruddy. They had substantial discussions regarding her possibly being employed by Maximus. They discussed generally the type of work she would do if she were hired by Maximus. In effect, Maximus, through Ruddy, was attempting to recruit Ms. Esposito to work for Maximus. At that meeting, Ruddy put two conditions on any job offer: (1) DOR approval, and (2) Ethics Commission approval.

11. According to Ms. Esposito, shortly after this meeting she contacted the Commission and obtained its approval. The Commission, however, has no record of any such contact.[2] In addition, Ms. Esposito asserts that on the next working day after her December 1, 1989 meeting with Ruddy, and before she further participated in the Maximus contract, she informed Osganian of the nature of her meeting with Ruddy. Osganian, however, has no recollection of being so informed and asserts that the first time he recalls becoming aware of Maximus’ interest in hiring Ms. Esposito was when he was called by Ruddy on December 15, 1989.

12. On December 12, 1989, Ms. Esposito approved the third deliverable pursuant to the Contract. This approval resulted in her superiors authorizing an additional $287,816.40 to be paid to Maximus.[3]

13. On December 14, 1989, Ms. Esposito wrote a memo to the DOR accounting department justifying paying the third deliverable before the second deliverable was completed.

14. On December 15, 1989, Ms. Esposito called Ruddy to say that she had talked to the Ethics Commission and Osganian, and that the conditions regarding his employment offer to her had been met.

15. On December 15, 1989, Ruddy called Osganian to confirm that DOR would have no objection to Ms. Esposito going to work for Maximus. Osganian informed Ruddy that the DOR would have no such problem.

17. On or about December 28, 1989, Ms. Esposito received a draft of a written offer of employment to work for Maximus. Eventually, Ms. Esposito did go to work for Maximus in March of 1990.

18. On January 3, 1990, Ms. Esposito was removed as contract administrator.

19. Except as otherwise permitted in that section,[4] section 6 of G.L. c. 268A prohibits a state employee from participating in a particular matter in which, to her knowledge, an organization with which she is negotiating an arrangement for prospective employment bas a financial interest.

20. The Contract was a “particular matter” as defined in G.L. c. 268A, §1(k).

21. When Ms. Esposito met with Maximus’ Ruddy on December 1, 1989, she was negotiating for employment with Maximus within the meaning of c. 268A, §6.[5] By the end of the meeting on December 1, 1989, both Maximus and Ms. Esposito had evinced an interest in each other as employer/employee. Indeed, Ruddy had stated be planned to make an offer subject to Ms. Esposito satisfying two conditions. Ms. Esposito indicated she would attempt to satisfy those conditions.

22. Notwithstanding the fact that she had begun negotiating with Maximus on December 1, 1989, Ms. Esposito participated in the Contract when she approved the third deliverable on December 12, 1989, and when on December 14, 1989, she wrote a memo justifying paying the third deliverable before the second deliverable was completed. In addition, she also participated by performing her day-to-day supervisory responsibilities regarding the Contract.

23. Maximus had an obvious financial interest in Ms. Esposito approving the third deliverable, as well as in her performing her day-to-day supervisory responsibilities.

24. Therefore, Ms. Esposito violated G.L. c. 268A, §6 when she participated in the Contract after beginning negotiating for employment with Maximus.

25. The Commission has found no evidence to suggest that in her capacity as a DOR employee, Ms. Esposito acted to provide any special or favorable treatment to Maximus while she was negotiating for employment with Maximus.[6]

26. By way of defense, Ms. Esposito claims that she notified her supervisor of her negotiations almost immediately after they began. As discussed above, Osganian does not recall being so informed. Even if Osganian had corroborated Ms. Esposito’s disclosure claim, such a disclosure would not be a defense. (See fn. 4 above which explains the §6 disclosure/exemption procedure.) Osganian was not her appointing authority and the disclosure and authorization were not in writing.[7]

In view of the foregoing violation of G.L. c. 268A, §6, the Commission has determined that the public interest would be served by the disposition of this matter without further enforcement proceedings on the basis of the following terms and conditions agreed to by Ms. Esposito:

1. that she pay to the Commission the sum of $500.00 as a civil penalty for violating G.L. c. 268A, §6[8]; and

2. that she waive all rights to contest the findings of fact, conclusions of law and terms and conditions contained in this Agreement in this or any related administrative or judicial proceeding to which the Commission is or may be a party.

[1] The other administrator was a representative from the Office of the Chief Justice of the Trial Court.

[2] Even if Ms. Esposito did call the Commission, she concedes that she was asking about post-DOR employment restrictions and not whether her having begun negotiating with Maximus barred her from further participation in the Contract.

[3] The second deliverable, the development of certain procedures, had not been satisfactorily completed before the third deliverable was ready.

[4] As noted in In the Matter of Deirdre A. Ling, 1990 SEC 456, §6 provides the following exemption for

a state employee whose duties require her to participate in a particular matter in which there is a prohibited financial interest: (1) she must advise her appointing official and this Commission in writing of the nature and circumstances of the particular matter and make full disclosure of her financial interest; and (2) the appointing official should then assign the matter to another employee, assume responsibility for the matter, or make a written determination (and file it with this Commission) that the financial interest is not so substantial as to be deemed likely to affect the integrity of the employee’s services.

[5] As the Commission has explained in Advisory No. 14:Although the term “negotiating” for prospective employment is not defined in G.L. c. 268A, the Commission and courts have given a common sense meaning to negotiating [footnote omitted]. The key operating principle is mutuality of interest. Where a public employee and a person or organization have scheduled a meeting to discuss the availability of a position and the employee’s qualifications for the position, the employee will be regarded as negotiating for prospective employment with that person or organization. See, EC-COI-82-8 (where an employee affirmatively responds to an inquiry from a prospective employer and meets with the employer, the employee is negotiating for future employment; Department of the Attorney General, Personnel Manual (1988), p. E-8 (“employment negotiations exist as soon as both the employee and the prospective employer show any interest in the employee working for the prospective employer. For example, disclosure must be made as soon as an employment interview is scheduled”).

[6] No such evidence, however, is necessary to establish a §6 violation. As the Commission said In the Matter of Mary V. Kurayian, 1986 SEC 260, 262, “Section 6, like many of the other sections of G.L. c. 268A, is intended to prevent any questions arising as to whether the public interest has been served with the single-minded devotion required of public employees.”

[7]See In the Matter of Dr. Diedre Ling, 1990 SEC 456, where the Commission stated:

The requirement that the disclosure and authorization be in writing serves at least two purposes. First, it establishes a record of both the disclosure and subsequent determination of the appointing authority, a record which, among other things, protects the interest of the state employee if allegations of impropriety should arise. Second, it forces both the state employee and the appointing authority to interest of the state employee if allegations of impropriety should arise. Second, it forces both the state employee and the appointing authority to consider carefully the nature of the conflict of interest and the options available for dealing with that conflict.

As the Commission said In the Matter of John J. Hanlon, 1986 SEC 253, 255,

These provisions are more than mere technicalities. They protect the public interest from potentially serious harm. The steps of the disclosure and exemption procedure - particularly that the determination be in writing and a copy filed with the Commission - are designed to prevent an appointing authority from making an uninformed, ill-advised or badly motivated decision.

[8] The Commission is authorized to impose a fine of up to $2,000 for each violation of G.L. c. 268A. However, notwithstanding the lack of confirmation, the Commission found credible Ms. Esposito’s testimony that she disclosed her negotiations with Maximus to her supervisor. Therefore, this reduced fine is appropriate.